International Economics
by Steve Suranovic
Table of Contents
- About the Author
- Acknowledgments
- Preface
-
Introductory Trade Issues: History, Institutions, and Legal Framework
- The International Economy and International Economics
- Understanding Tariffs
- Recent Trade Controversies
- The Great Depression, Smoot-Hawley, and the Reciprocal Trade Agreements Act (RTAA)
- The General Agreement on Tariffs and Trade (GATT)
- The Uruguay Round
- The World Trade Organization
- Appendix A: Selected U.S. Tariffs—2009
- Appendix B: Bound versus Applied Tariffs
-
The Ricardian Theory of Comparative Advantage
- The Reasons for Trade
- The Theory of Comparative Advantage: Overview
- Ricardian Model Assumptions
- The Ricardian Model Production Possibility Frontier
- Definitions: Absolute and Comparative Advantage
- A Ricardian Numerical Example
- Relationship between Prices and Wages
- Deriving the Autarky Terms of Trade
- The Motivation for International Trade and Specialization
- Welfare Effects of Free Trade: Real Wage Effects
- The Welfare Effects of Free Trade: Aggregate Effects
- Appendix: Robert Torrens on Comparative Advantage
- The Pure Exchange Model of Trade
-
Factor Mobility and Income Redistribution
- Factor Mobility Overview
- Domestic Factor Mobility
- Time and Factor Mobility
- Immobile Factor Model Overview and Assumptions
- The Production Possibility Frontier in the Immobile Factor Model
- Autarky Equilibrium in the Immobile Factor Model
- Depicting a Free Trade Equilibrium in the Immobile Factor Model
- Effect of Trade on Real Wages
- Intuition of Real Wage Effects
- Interpreting the Welfare Effects
- Aggregate Welfare Effects of Free Trade in the Immobile Factor Model
-
The Heckscher-Ohlin (Factor Proportions) Model
- Chapter Overview
- Heckscher-Ohlin Model Assumptions
- The Production Possibility Frontier (Fixed Proportions)
- The Rybczynski Theorem
- The Magnification Effect for Quantities
- The Stolper-Samuelson Theorem
- The Magnification Effect for Prices
- The Production Possibility Frontier (Variable Proportions)
- The Heckscher-Ohlin Theorem
- Depicting a Free Trade Equilibrium in the Heckscher-Ohlin Model
- National Welfare Effects of Free Trade in the Heckscher-Ohlin Model
- The Distributive Effects of Free Trade in the Heckscher-Ohlin Model
- The Compensation Principle
- Factor-Price Equalization
- The Specific Factor Model: Overview
- The Specific Factor Model
- Dynamic Income Redistribution and Trade
-
Economies of Scale and International Trade
- Chapter Overview
- Economies of Scale and Returns to Scale
- Gains from Trade with Economies of Scale: A Simple Explanation
- Monopolistic Competition
- Model Assumptions: Monopolistic Competition
- The Effects of Trade in a Monopolistically Competitive Industry
- The Costs and Benefits of Free Trade under Monopolistic Competition
-
Trade Policy Effects with Perfectly Competitive Markets
- Basic Assumptions of the Partial Equilibrium Model
- Depicting a Free Trade Equilibrium: Large and Small Country Cases
- The Welfare Effects of Trade Policies: Partial Equilibrium
- Import Tariffs: Large Country Price Effects
- Import Tariffs: Large Country Welfare Effects
- The Optimal Tariff
- Import Tariffs: Small Country Price Effects
- Import Tariffs: Small Country Welfare Effects
- Retaliation and Trade Wars
- Import Quotas: Large Country Price Effects
- Administration of an Import Quota
- Import Quota: Large Country Welfare Effects
- Import Quota: Small Country Price Effects
- Import Quota: Small Country Welfare Effects
- The Choice between Import Tariffs and Quotas
- Export Subsidies: Large Country Price Effects
- Export Subsidies: Large Country Welfare Effects
- Countervailing Duties
- Voluntary Export Restraints (VERs): Large Country Price Effects
- Administration of a Voluntary Export Restraint
- Voluntary Export Restraints: Large Country Welfare Effects
- Export Taxes: Large Country Price Effects
- Export Taxes: Large Country Welfare Effects
-
Domestic Policies and International Trade
- Chapter Overview
- Domestic Production Subsidies
- Production Subsidies as a Reason for Trade
- Production Subsidy Effects in a Small Importing Country
- Domestic Consumption Taxes
- Consumption Taxes as a Reason for Trade
- Consumption Tax Effects in a Small Importing Country
- Equivalence of an Import Tariff with a Domestic (Consumption Tax plus Production Subsidy)
-
Trade Policies with Market Imperfections and Distortions
- Chapter Overview
- Imperfections and Distortions Defined
- The Theory of the Second Best
- Unemployment and Trade Policy
- The Infant Industry Argument and Dynamic Comparative Advantage
- The Case of a Foreign Monopoly
- Monopoly and Monopsony Power and Trade
- Public Goods and National Security
- Trade and the Environment
- Economic Integration: Free Trade Areas, Trade Creation, and Trade Diversion
- Political Economy and International Trade
- Evaluating the Controversy between Free Trade and Protectionism
- Introductory Finance Issues: Current Patterns, Past History, and International Institutions
-
National Income and the Balance of Payments Accounts
- National Income and Product Accounts
- National Income or Product Identity
- U.S. National Income Statistics (2007–2008)
- Balance of Payments Accounts: Definitions
- Recording Transactions on the Balance of Payments
- U.S. Balance of Payments Statistics (2008)
- The Twin-Deficit Identity
- International Investment Position
- The Whole Truth about Trade Imbalances
- Foreign Exchange Markets and Rates of Return
-
Interest Rate Parity
- Overview of Interest Rate Parity
- Comparative Statics in the IRP Theory
- Forex Equilibrium with the Rate of Return Diagram
- Exchange Rate Equilibrium Stories with the RoR Diagram
- Exchange Rate Effects of Changes in U.S. Interest Rates Using the RoR Diagram
- Exchange Rate Effects of Changes in Foreign Interest Rates Using the RoR Diagram
- Exchange Rate Effects of Changes in the Expected Exchange Rate Using the RoR Diagram
- Purchasing Power Parity
-
Interest Rate Determination
- Overview of Interest Rate Determination
- Some Preliminaries
- What Is Money?
- Money Supply Measures
- Controlling the Money Supply
- Money Demand
- Money Functions and Equilibrium
- Money Market Equilibrium Stories
- Effects of a Money Supply Increase
- Effect of a Price Level Increase (Inflation) on Interest Rates
- Effect of a Real GDP Increase (Economic Growth) on Interest Rates
- Integrating the Money Market and the Foreign Exchange Markets
- Comparative Statics in the Combined Money-Forex Model
- Money Supply and Long-Run Prices
-
National Output Determination
- Overview of National Output Determination
- Aggregate Demand for Goods and Services
- Consumption Demand
- Investment Demand
- Government Demand
- Export and Import Demand
- The Aggregate Demand Function
- The Keynesian Cross Diagram
- Goods and Services Market Equilibrium Stories
- Effect of an Increase in Government Demand on Real GNP
- Effect of an Increase in the U.S. Dollar Value on Real GNP
- The J-Curve Effect
- The AA-DD Model
- Policy Effects with Floating Exchange Rates
- Fixed Exchange Rates
-
Policy Effects with Fixed Exchange Rates
- Overview of Policy with Fixed Exchange Rates
- Monetary Policy with Fixed Exchange Rates
- Fiscal Policy with Fixed Exchange Rates
- Exchange Rate Policy with Fixed Exchange Rates
- Reserve Country Monetary Policy under Fixed Exchange Rates
- Currency Crises and Capital Flight
- Case Study: The Breakup of the Bretton Woods System, 1973
- Fixed versus Floating Exchange Rates
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